Characteristics of Investment Companies that Own Newspapers


Similarities in Characteristics of Seven Largest Investment Companies who own Newspapers

The new media barons, investment companies, are very different from the traditional publishers and owners of newspaper chains. To be classified as an “investment entity,” a company must meet at least five of the eight characteristics in the above chart. More specifics on each of the seven investment companies who own and operate newspapers follow.

New Media/GateHouse

The stated emphasis of the company, or its highest-level parent company, is to maximize shareholder return on investment.

Fortress Investment Group, New Media/GateHouse’s parent company, opened its 2015 annual report with: “Our managed funds primarily employ absolute return strategies – we strive to have positive returns regardless of the performance of the markets. Investment performance is our cornerstone – as an investment manager, we earn more if our investors earn more.”

Many properties were acquired as a group from other media companies through either purchase of entire companies or purchase of newspaper divisions.

New Media/GateHouse has predominantly grown from large acquisitions, including the purchase of Liberty Publishing in 2005, Herald Media in 2006, Dow Jones Local Media Group in 2013 and Dispatch Printing and Stephens Media in 2015, among other large purchases.

Majority financial control of the firm is held by a small number of institutional shareholders, such as lenders, private equity firms or investment fund managers.

Fortress Investment Group (FIG), which took over a bankrupt Liberty Publishing in 2005 to create the future New Media/GateHouse, owns and manages the company. FIG manages over $70 billion of private equity and hedge funds.

The company was formed or incorporated within the past two decades and is a relative newcomer to newspaper ownership.

GateHouse was formed in 2005 when FIG acquired Liberty Publishing. GateHouse emerged from bankruptcy in 2013 under the management of the Fortress holding company, New Media Investment Group.

The newspaper holdings are part of a portfolio of non-newspaper companies.

FIG has a diverse set of holdings that exceed $70 billion in 2016. The New York Times described the company as follows: “While little known outside Wall Street, Fortress covers a cross section of American life through companies it owns or manages. It controls the nation’s largest nonbank collector of mortgage payments. It is building one of the country’s few private passenger railroads. It helps oversee a company that manages public golf courses in several states. It also controls Springleaf Financial Services, a huge provider of subprime loans to borrowers with few other options aside from payday lenders often charging 300 percent.”

There has been much movement of individual newspapers within portfolios.
New Media/GateHouse has acquired more than 600 newspapers since 2005 and closed or sold an estimated 100 newspapers since its formation, according to UNC research. The company has closed dailies, including the Kansas City Kansan, the Derby Reporter and the Edinburg Daily Review, and many weeklies.

There have been two or more financial restructurings of the investment company, including bankruptcy reorganization, a rebranding after selling the company or flips between public and private ownership.

The original acquisition of Liberty Publishing occurred as the company was in bankruptcy in 2005. In 2013, GateHouse also filed for bankruptcy and emerged under management of the holding company, New Media Investment Group, which is under the Fortress umbrella.

A private equity company, a hedge fund or pension fund has at some point during the past decade owned all or a portion of the enterprise.
Fortress, owner of New Media/GateHouse, is a private equity firm, which is also publicly traded on the New York Stock Exchange. New Media/GateHouse was originally formed from the purchase of Liberty Publishing in 2005 from Leonard Green & Partners, another private equity firm.

Digital First

The stated emphasis of the company, or its highest-level parent company, is to maximize shareholder return on investment.

Alden Global Capital, Digital First's parent company, has little publicly available information. According to Bloomberg: “Alden Global Capital LLC is a privately owned hedge fund sponsor. It provides its services to funds, pension plans, foundations, funds of funds, charitable organizations, trusts, estates, corporations, sovereign wealth funds, other institutional investors and high net worth individuals. The firm manages separate client-focused portfolios.

It invests in public equity, fixed income, and alternative investment markets.

The firm primarily invests in value stocks of companies. It seeks to invest opportunistically in event-driven strategies.”

Many properties were acquired as a group from other media companies through either purchase of entire companies or purchase of newspaper divisions.

Digital First has derived a large number of its newspapers through acquisitions, including the acquisition of Journal Register in 2011, MediaNews Group in 2011, and the OC Register and its associated newspapers in 2016.

Majority financial control of the firm is held by a small number of institutional shareholders, such as lenders, private equity firms or investment fund managers.

Alden Global Capital, owner of Digital First, is a hedge fund, established in 2007 by Randy Smith.

The company was formed or incorporated within the past two decades and is a relative newcomer to newspaper ownership.
Digital First was founded in 2011 by merging the newspapers acquired from two bankruptcies – Journal-Register and MediaNews – into one company.

The newspaper holdings are part of a portfolio of non-newspaper companies.
According to news accounts, Alden Global Capital manages over $2.5 billion in assets. A leaked 2010 update discusses investments in packaging and financial services.

There has been much movement of individual newspapers within portfolios.
Digital First has acquired, merged and sold dozens of newspapers. For example, the company merged five newspapers into the now-defunct Washtenaw Now and six newspapers into the East Bay and South Bay Times. It has recently sold newspapers, including smaller dailies and the Salt Lake Tribune.

There have been two or more financial restructurings of the investment company, including bankruptcy reorganization, a rebranding after selling the company or flips between public and private ownership.
Both of the companies that formed the basis of Digital First, Journal Register and MediaNews Group, were purchased during bankruptcy proceedings and then combined to form Digital First.

A private equity company, a hedge fund or pension fund has at some point during the past decade owned all or a portion of the enterprise.
Alden Global Capital, Digital First's owner, is a large hedge fund.

COMPANY: CNHI

The stated emphasis of the company, or its highest-level parent company, is to maximize shareholder return on investment.

The company is owned by the Retirement Systems of Alabama (RSA), which seeks “to secure the best investments and services for our membership, and to ensure that we do everything possible to help our members prepare for and enjoy a successful retirement.”
Many properties were acquired as a group from other media companies through either purchase of entire companies or purchase of newspaper divisions.
In 1997, the company acquired 14 dailies from Media General. It later acquired 45 newspapers from Hollinger in 1999 and 17 from Thomson in 2000. Since 2000, it has made smaller purchases.

Majority financial control of the firm is held by a small number of institutional shareholders, such as lenders, private equity firms or investment fund managers.

Retirement Systems of Alabama (RSA), owner of CNHI, manages investments for the state of Alabama’s pension fund.

The company was formed or incorporated within the past two decades and is a relative newcomer to newspaper ownership.

CNHI was founded in 1997.

The newspaper holdings are part of a portfolio of non-newspaper companies.

RSA owns a number of non-newspaper companies, including golf courses, real estate and movie theaters.

There has been much movement of individual newspapers within portfolios.

Over the past decade, the company has sold or closed about 45 newspapers and made “opportunistic” purchases of other papers.

A private equity company, a hedge fund or pension fund has at some point during the past decade owned all or a portion of the enterprise.

CNHI is owned by Retirement Systems of Alabama (RSA), a pension fund.

COMPANY: Civitas

The stated emphasis of the company, or its highest-level parent company, is to maximize shareholder return on investment.

Civitas is owned by Versa Capital Management, with a stated focus on maximizing returns by investing in distressed companies : “Whether a company needs direct or indirect investment to transcend a complex operating environment – or to take advantage of promising market conditions – Versa looks for investment opportunities in North American-based businesses with revenues in the $50 million to $1 billion range or assets of $25 million to $500 million. Our areas of interest include: Buyouts, Divestitures, Restructurings & Turnarounds, Reorganization & Liquidations.”

Many properties were acquired as a group from other media companies through either purchase of entire companies or purchase of newspaper divisions.

Versa Capital Management founded Civitas after acquiring four companies – three of them in bankruptcy proceedings – and combining them under the Civitas umbrella: Ohio Community Media (formerly Brown Publishing), Impressions Media, Heartland and Freedom Central.

Majority financial control of the firm is held by a small number of institutional shareholders, such as lenders, private equity firms or investment fund managers.

The owner of Civitas, Versa Capital Management, is a self-described private equity investment firm.

The company was formed or incorporated within the past two decades and is a relative newcomer to newspaper ownership.

Civitas was founded in 2012.

The newspaper holdings are part of a portfolio of non-newspaper companies.

Versa Capital Management owns a highly diversified portfolio that includes retail stores, restaurants and parking management companies.

There has been much movement of individual newspapers within portfolios.

Civitas has recently closed and sold newspapers in Ohio, North Carolina and South Carolina.

There have been two or more financial restructurings of the investment company, including bankruptcy reorganization, a rebranding after selling the company or flips between public and private ownership.

The creation of Civitas came from the acquisition and restructuring of four separate companies, which were merged and rebranded as a new entity, Civitas.

A private equity company, a hedge fund or pension fund has at some point during the past decade owned all or a portion of the enterprise.

Civitas is owned by Versa Capital Management, a private equity investment firm.

COMPANY: tronc/Tribune

The stated emphasis of the company, or its highest-level parent company, is to maximize shareholder return on investment.

The company’s three primary creditors before Merrick Ventures LLC’s takeover were all focused on delivering strong returns to their investors:
“Oaktree’s mission is to deliver superior investment results with risk under control and to conduct our business with the highest integrity.”
“Angelo, Gordon's Private Equity Group, manages over $1 billion in existing investments and committed capital. We focus on acquiring businesses and assets with strong management that have the potential for meaningful growth and value creation.”
JPMorgan Chase & Co.: “We continued to deliver for our shareholders in 2015.”

Many properties were acquired as a group from other media companies through either purchase of entire companies or purchase of newspaper divisions.

The Tribune Co., which included the broadcast and publishing divisions, was purchased in 2007 by private equity fund manager Sam Zell. The publishing company has grown in recent years with purchases of the Sun-Times Media Group in 2014, and the San Diego Union-Tribune and its associated newspapers in 2016.

Majority financial control of the firm is held by a small number of institutional shareholders, such as lenders, private equity firms or investment fund managers.
Michael Ferro's private equity firm, Merrick Ventures LLC, gained majority control of the company in 2016.

There has been much movement of individual newspapers within portfolios.
The company has acquired about 60 papers and either closed or sold six weeklies and dailies, all in 2007 and 2008, immediately after Zell’s purchase of the company. The papers sold included the Greenwich Time, Stamford Advocate and Valley Advocate in the New York/Connecticut area. The company also closed the daily Spanish newspaper Hoy New York.

There have been two or more financial restructurings of the investment company, including bankruptcy reorganization, a rebranding after selling the company or flips between public and private ownership.

Tribune Publishing has undergone significant changes in recent years. In 2007, Zell took the publicly traded company private. The company filed for bankruptcy in 2008, emerged in 2012 under the control of institutional investors and went public. Ferro's private equity firm, Merrick Ventures LLC, along with Nant Capital, has acquired a majority of the voting shares.

A private equity company, a hedge fund or pension fund has at some point during the past decade owned all or a portion of the enterprise.
Over the past four years, JP Morgan Chase & Co.; Oaktree Capital Management LP; Angelo, Gordon, & Co.; and Merrick Ventures have owned portions of the enterprise.

COMPANY: BH Media

The stated emphasis of the company, or its highest-level parent company, is to maximize shareholder return on investment.

BH Media is owned by Berkshire Hathaway, which has investments in a diverse portfolio of businesses, including railroads, financial services, insurance and energy. The objective of the company is to make a profit for its shareholders, as noted in the 2013 Annual Report: “Over the stock market cycle between year ends 2007 and 2013, we over-performed the S&P. Through full cycles in future years, we expect to do that again. If we fail to do so, we will not have earned our pay.”
Many properties were acquired as a group from other media companies through either purchase of entire companies or purchase of newspaper divisions.
BH Media was created in 2011 with the acquisition of the Omaha World-Herald and its associated newspapers. The company made its largest purchase in 2012 when it acquired Media General (with the exception of the Tampa-area newspapers). It has since added to its portfolio of newspapers through purchases in Oklahoma and elsewhere in the South.
Majority financial control of the firm is held by a small number of institutional shareholders, such as lenders, private equity firms or investment fund managers.
Berkshire Hathaway, a publicly traded investment fund headed by Warren Buffett, is the owner of BH Media.

The company was formed or incorporated within the past two decades and is a relative newcomer to newspaper ownership.

BH Media was created in 2011.

The newspaper holdings are part of a portfolio of non-newspaper companies.

Berkshire Hathaway has a highly diversified portfolio, including investments in credit cards, food manufacturers and auto insurance. BH Media is a small part of its portfolio.

COMPANY: 10/13 Communications

The stated emphasis of the company, or its highest-level parent company, is to maximize shareholder return on investment.

A leaked circa-2007 Managers' Guide emphasizes the focus on profits over journalism: “Many companies in our industry have wrongly divided their focus among many customer groups. We do not. Our customer is the advertiser. Readers are our customers’ customers.”

Many properties were acquired as a group from other media companies through either purchase of entire companies or purchase of newspaper divisions.

10/13 Communications has grown through a series of purchases, including some newspapers from Freedom Communications in 2010, American Community Newspapers in 2012 and ASP Westward’s Houston Newspapers in 2012.

Majority financial control of the firm is held by a small number of institutional shareholders, such as lenders, private equity firms or investment fund managers.

10/13 Communications was created and owned by three business partners. In August 2009, 10k Investments (owned by Arne Hoel and Brett Coleman) and 13th Street Media (owned by Randy Miller) came together came together to form 10/13 Communications.

The company was formed or incorporated within the past two decades and is a relative newcomer to newspaper ownership.
The company was formed in 2009.

The newspaper holdings are part of a portfolio of non-newspaper companies.
The owners of 10/13 Communications also own investments in other industries, including auto dealerships.

A private equity company, a hedge fund or pension fund has at some point during the past decade owned all or a portion of the enterprise.
The company formed as a private partnership between 10K Investments and 13th Street Media.

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